In the weeks leading up to the Budget in the United Kingdom (UK) a public conversation about the alcohol tax has started. Communities are calling on the Chancellor for an increase in the alcohol tax by 2% above inflation to save lives. Big Alcohol is lobbying against the alcohol duty increase.
This is a debate which takes place every year. And every year since 2012 the tax duty on the alcohol industry has been cut or frozen. The citizens of the UK have suffered the brunt of this decision and even pubs and bars see no positive effect.
The duty cuts since 2012 cost the UK:
- Around £1.3 billion a year, enough to fund the salaries of 41,000 nurses.
- The social cost of alcohol on UK communities is £27 billion per year, but the alcohol duty does not even cover half of this cost as it currently only raises £12 billion per year.
- The tax cuts took the lives of 2000 people, caused 61,000 avoidable hospital admissions and fueled 111,000 alcohol-related crime cases.
The duty cuts have led to a massive problem of cheap alcohol in the country. Overall alcohol taxes have fallen by 9% on beer; 12% on cider and spirits; and 3% on wine, which has made alcohol cheaper in the UK. The cheaper the alcohol is the higher is alcohol harm, affecting people, families, businesses and communities.
But this is also true: the cheaper alcohol is, the higher are the sales for the industry. Cheap alcohol specifically preys on already vulnerable people, for example people with heavy alcohol problems or people from lower socio-economic groups.
A 2018 report from the Institute of Alcohol Studies shows that heavy alcohol users only make up 25% of all alcohol users but provide 68% of industry revenue.
The duty cuts have not led to a positive effect on people who go to pubs and bars or the owners either. In a survey of people who went to pubs in the North East of England carried out by Balance in 2018 a majority saw no benefit passed on to them. In terms of pubs itself, they have to close down much more frequently since the duty cuts. These businesses are suffering as they have to compete with cheap alcohol sold in supermarkets.
COVID-19 has made matters even worse. Supermarket sales of alcohol have increased massively. The Royal College of Psychiatrists in September 2020 estimated the number of people who use alcohol at high-risk levels in the UK almost doubled during the pandemic from 4.8 million people to 8.4 million people. For places such as North East England where harm is disproportionate already, this means even higher inequality.
Between 2008 and 2012, the UK increased the alcohol duty by 2% above inflation on an annual basis under the so-called “duty escalator”. This mechanism to increase taxes was set to last at least until 2015, but was surprisingly abandoned in 2013 by former chancellor George Osborne.
Increasing taxes by 2% as the communities call for would help solve the cheap alcohol problem. A study by the Institute of Alcohol Studies and the University of Sheffield found reintroducing the duty escalator would cut alcohol consumption in England to 2.2% below 2012 levels by 2032.
… a system which incentivizes the production of strong alcohol and fails to generate enough revenue to cover the costs of the harm it causes is in urgent need of reform,” wrote Colin Shevills, Director of Balance the North East Alcohol Office, as per Alcohol Health Alliance.
Our next task is to ensure that the government’s decision to review how it works leads to a system which taxes [alcohol products] according to strength; covers the cost of the harm alcohol causes society; and does away with the annual duty bun fight. People’s lives depend on it.”Colin Shevills, Director of Balance the North East Alcohol Office
The solutions are at hand, evidence is clear, what is needed is the Chancellor and the government to take action.